As per the World Steel Association outlook, global steel demand is expected to grow moderately during this as well as the next year in tandem with a slowing global economy.

The agency foresees an increase in global steel demand by 1.3 percent in 2019 and 1 percent in the next year due to robust Chinese demand amid government’ economic stimuli.

There are reports that uncertainties surrounding trade policies between the world’s top two economies, Chinese economic deceleration, sluggish manufacturing growth, and slowing global economy had an adverse impact on global metal prices.

However, steel futures in the benchmark Shanghai Futures Exchange (ShFE) platform currently trading at near multi-month high.

Steel is the world’s second most used material after cement and prices of the commodity has been in the upside trajectory from the beginning of 2016 till the end of 2018.

This was due to worries over supply squeeze from the top producer China amid their plan of cutting down the excess capacity of heavy industries.

China is the leading producer and consumer of steel, and demand and supply from the country largely influence the global steel prices.

Steel output from China is still higher. Steel mills have ramped up operations due to liberal production policies by the government and higher profit margins.

The demand is also higher compared to the previous year as inventory levels at mills and traders are reportedly low despite increasing output.

Chinese government typically imposes production restrictions on heavy industries like steel mills in winter due to environmental issues, but this year’s curbs were lenient compared to last year.

The country has produced a total of 231.07 million tonnes of steel in the first three months of this year, up 9.9 percent when it compared with the same period last year.

It is also expected that China could continue with higher output in the coming months too, supported by higher demand.

Amid slow industrial growth, there is widespread optimism that the country will announce more economic stimulus measures that could boost demand for commodities like steel.

A positive deal on trade talks is likely to prompt traders to bet on metals again and this could take price further higher. On the domestic side, apart from the overseas factors a volatility in local currency also has an impact on prices.